Deferred Tax Asset

1. A deferred tax asset is the estimated future tax effect of temporary differences and carryforwards when future taxable income (and thus taxes payable) will be less than future financial accounting income (and thus income tax expense). All deferred tax assets may not be reported on the balance sheet because there may be a valuation allowance. See also valuation allowance. Under GAAP, the deferred tax benefits attributable to deductible temporary differences.